Alleged Rs. 2 billion Lotus Tower fraud Former DG-TRC Anusha rejects President’s claim

Former Director General of Telecommunication Regulatory Commission Anusha Pelpita yesterday rejected as baseless the claim made by President Maithripala Sirisena that the government had incurred a loss of Rs. 2 billion due to an advance payment made to a Chinese company. 

He said that no amount of money had been paid to ALIT, the Company that was mentioned by the President in his speech.   

In a statement issued yesterday Pelpita said that the US$ 15.45 million paid to CEIEC Company as advance had also been recovered from that Company.   
The full statement reads as follows:   

“The Lotus Tower construction project was started in 2012 on the instructions of the Former President Mahinda Rajapaksa. On the recommendation of the then Sri Lankan Ambassador in China Karunathilleke Amunugama, the China National Electronics Import and Export Corporation (CEIEC) and Aerospace Long-March International Trade Co. Ltd (ALIT) were selected as contractors of this construction with the approval of the Cabinet. US$104.3 Million was approved by the Tender Board as initial cost of this project. “The Cabinet granted its approval for US$ 15.45 Million to be paid out of the funds of the Telecommunication Regulatory Commission and the balance US$ 88.5 Million to be obtained as a loan from the EXIM Bank of China.   
“In 2012 at the commencement of this project US$ 15.45 Million, or nearly rupees two billion was paid as Mobilization Advance to the CEIEC Company. The Telecommunication Regulatory Authority received the approval of the Cabinet of Ministers, and the Monetary Board of the Central Bank to make this payment. The relevant amount had been remitted to an account maintained by the CEIEC Company at the EXIM Bank of China. No payment whatsoever had been paid to the ALIT Company. The main contractor CEIEC Company had provided an Irrevocable on Demand Bank Guarantee to the Telecommunication Regulatory Commission covering this advance payment.   

 “Depending on the progress of the project, and on the recommendation of the Professors of the Moratuwa University when making supplementary payments, recoveries had been made from the initial advance payment and by 2018 the unrecovered amount from the advance amounted to US Dollars 2.13 Million. Due to the protracted delay in the project EXIM Bank refused to provide the balance of the loan. By that time, out of the total loan amount of US Dollars 88.5 Million, only an amount of US Dollars 67 Million had been recovered.   
“All other payments after the initial advance had been paid to the CEIEC Company through the EXIM Bank. Since 2018 all supplementary payments had been made out of provisions of the Telecommunication Regulatory Authority. 

The unrecovered amount of US$  2.13 Million from the Initial advance, as at 2018 had also been recovered from the amounts payable to the CEIEC Company. The US$ 15.45 Million paid to CEIEC Company as advance had also been recovered from the CEIEC Company.   

“Therefore the statement made by President Maithripala Sirisena, on 16th September 2019, during the opening of the Lotus Tower that a fraud amounting to Rs. 2 billion had been committed when constructing the Lotus Tower is baseless. I wish to reiterate that no amount of money had been paid to ALIT Company by the Telecommunication Regulatory Authority”